According to the latest IBO Business Climate Survey, optimism among executives at analytical instrument and lab product companies and associated suppliers is on the upswing. Seventy-three percent of executives surveyed expect sales for the industry as a whole to increase moderately in the second and third quarters (see graph, page 4). This is a notable increase from both the fall 2013 survey (see IBO 10/15/13), when 39% expected a moderate increase, and the spring 2013 survey (see IBO 5/15/13), when 55% did. Not one respondent expected sales to decline.

The spring 2014 IBO Business Climate Survey was conducted by e-mail in early May. The 26 survey respondents included IBO subscribers and other instrument, lab product and component suppliers.

Such optimism is not shared by the Organization for Economic Co-operation and Development (OECD), which earlier this month lowered its 2014 global economic-growth forecast from 3.6% (see IBO 1/15/14) to 3.4%. The forecast for OECD countries was lowered from 2.3% to 2.2%. Within the OECD, growth forecasts were lowered for the US, Germany and Japan from 2.9%, 1.9% and 1.5% to 2.6%, 1.7% and 1.2%, respectively. But the euro area is now projected to grow 1.2%, up from the previous forecast of 1.0% growth.

Forecasts for three of the four BRIC nations were lowered, with Brazil, Russia and China now expected to grow 1.8%, 0.5% and 7.4% compared with the earlier forecast of 2.2%, 2.3% and 8.2% growth, respectively. However, India’s growth forecast was raised from 4.7% to 5.4%.

Survey results suggest that much of the instrument and lab product makers’ positive outlook is due to more buoyant sentiments about the North American market. North America received the highest average rating for expected sales growth in the second and third quarters. Respondents rated geographic markets on a scale of 1 to 5, with 1 indicating worsening sales, 3 indicating stability and 5 indicating improving sales. The average rating for North America leaped to 3.7, up from 2.9 last fall, making it the highest-rated region in the survey.

Executives also expressed a considerably brighter outlook for Western Europe. The average rating for Western Europe jumped from 2.9 in the fall 2013 survey to 3.4 in the latest survey, ranking it ahead of India and China.

However, North America and Western Europe were the only two regions to show a substantial increase in their average ratings compared with last fall. Latin America and Eastern Europe showed the greatest declines, down three-tenths of a percentage point and five-tenths of a percentage point compared with fall 2013 to 3.0 and 2.8, respectively. The average rating for all regions was 3.3.

Notable increases from last fall in average ratings were also evident for end-markets. Although the average rating for government increased from 2.2 last fall to 2.9 this spring, this market once again received the lowest average rating, a position it has occupied since spring 2011 (see IBO 5/15/11).

Like last fall, biotechnology and energy received the highest-average ratings this spring among 12 end-user markets. Enthusiasm for the prospects for each even increased, rising five-tenths of a percentage point for biotech and four-tenths of a percentage point for energy to 3.9 and 3.8, respectively. Respondents also showed greater confidence in the pharmaceutical end-market, with its average rating rising six-tenths of a percentage point to 3.5. In fact, the average ratings for 10 of the 11 end-markets that appeared in the fall 2013 and this survey increased, with the exception of agriculture. A new end-market, clinical/diagnostics, was added to the survey this spring and received an average rating of 3.6. The average rating for all end-markets was 3.4.

Respondents’ optimism was also reflected in their views of potential sales headwinds for the year ahead. Asked to rate six headwinds on a scale of 1 to 5, with 1 indicating no effect and 5 indicating a severe effect, only 2 of the 6 received average ratings of more than 3.0. Receiving the highest average ratings were the Chinese economic-growth slowdown and pricing pressure, with average ratings of 3.4 and 3.2, respectively. Concern about these factors appears to have remained constant since last fall’s survey, when respondents were asked about the likely effect on sales growth of certain negative factors. At that time, the Chinese slowdown and pricing pressure received respective average ratings of 3.2 and 3.4.

Concerns about the slowdown of industrial end-markets, however, appear to be easing. In the fall 2013 survey, respondents rated the slowdown of industrial end-markets a 3.4 on average. In this survey, the average rating for industrial market softness was a 2.9. North American and Western European government-market softness, North American and Western European academic-market softness, and currency effects received respective average ratings of 2.9, 2.8 and 2.6.

Survey respondents were also asked what additional headwinds they would add to the list. Answers to this question focused on end-markets issues, with each provided by just one respondent, included possible pharmaceutical consolidation, environmental pressures on the fracking industry and changes in FDA regulations. Geographically related responses, each given by one respondent, included South American economic growth and depreciation of currencies in Asia. Two respondents indicated the Russia-Ukraine situation.

Asked specifically about what effect Russian and Ukrainian events are expected to have on instrument and lab products sales growth in Russia and surrounding countries over the next six months, the average rating was a 2.9, indicating some concern. However, the largest percentage of those surveyed, 35%, rated the situation a 2.

IBO also sought to gage the usefulness of six types of marketing tools on a scale of 1 to 5, with 1 indicating no effect and 5 indicating extreme effectiveness. Websites received the highest average rating at 4.0. Another Internet-enabled form of marketing, the webinar, received the second-highest average rating at 3.8. The only other of the six forms of marketing asked about to receive an average rating higher than 3.5 was demonstration centers, with a 3.6.

The other marketing tools that IBO asked about were three types of conferences: industry conferences (for which the International Food Technologist Conference was given as an example), scientific-research conferences (for which the American Society of Human Genetics Annual Meeting was given as an example) and large trade shows (for which Analytica was given as an example). Among conference types, industry-focused conferences received the highest average rating at 3.4, followed by research conferences, with a 3.2. Large trade shows received an average rating of 2.8.

Asked what form of marketing respondents would add to the list, individual responses included catalogs, ”small booths set up in academic offices and biotech/research parks,” “demo systems at customer sites,” “lunch and learn seminars,” user groups and social media. Two respondents cited word of mouth.